What Does A Corporate Raider Do?

What Does A Corporate Raider Do?

1 Answer

  1. The main agenda behind a corporate raider is to effectively generate an attractive return for their investment. As we know, Corporate raiders scout for companies that are proven undervalued. And to Identify an undervalued company requires a deep understanding of a company’s current financial position, the management’s competence, business model, and future business prospects. The beginning of identifying an undervalued company can be done through a stock screener and looking for companies that are trading at a low valuation. Or we can say, if the valuation multiples of the company in question are materially lower than its peers, it is considered undervalued. After then, the corporate raider will delve into analyzing the business and its financial statements to determine whether the low valuation multiples are justified or not. If the corporate raider believes that the company is undervalued, he will start the raid process. The most common method that raiders use to acquire an undervalued company is by purchasing shares on the open market. Upon acquiring an undervalued company, the corporate raider will attempt to increase the value of the company by replacing its poorly performing management, delving assets, or positioning the business for a sale or merger.corporate raiders make capital markets more efficient by identifying underperforming companies and improving them.

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